Greencoat UK Wind’s (UKW) aim is to provide investors with an annual dividend that increases in line with RPI inflation (target of 6.94p for 2019, a yield of 5.1%) while preserving the real value of the NAV in the long term through reinvestment of excess cashflow and the use of portfolio gearing. So far it has delivered on all of its promises since launch in 2013. UKW is now the largest listed renewable infrastructure fund, with net assets of in excess of £1.7bn (after the recent placing). Investment activity this year has continued apace, with £452m invested so far in 2019. This will bring the total portfolio to c. £2.3bn in size by the end of March. The managers expect to be able to benefit from scale, both in operational terms, but also in terms of acquisitions and financing. The OCF last year fell to 1.13% (from 2017’s 1.24% and 1.46% at listing) and is forecast to be 1.08% after the recent placing. The portfolio will shortly constitute investments (in whole or in part) in 34 operating UK wind farms around the country. These assets represent a net generating capacity of 950MW, enough to power c.900,000 homes. As such, the portfolio has geographic diversification around the UK, not to mention diversification by turbine manufacturer and by units – the company will own (or has interests in) a total of 715 turbines by the end of March. UKW buys only operating wind farms in the UK. UKW has unequivocally been a strong performer since it launched. The NAV total return (i.e. with dividends reinvested) since launch has been 8.3% pa. Despite the considerably lower volatility that the company exhibits, on a NAV total return basis UKW has outperformed both the FTSE All Share Index total return since launch, and peers in the listed renewable infrastructure sector. Around 50% of the company’s cashflows are directly index-linked, with the remainder being exposed to electricity prices. As such, electricity prices, which are assumed to have a correlation to inflation, affect UKW’s ability to grow NAV by RPI in the long term. Given the high dividend cover of 1.7x on average, the company expects to grow the dividend by RPI on an annual basis over the long term. Currently the trust has £400m of longer-term fixed rate borrowing, with a weighted average cost of 3.08% and remaining term of 5.6 years. The trust has an additional £394m of shorter-term gearing drawn down, equivalent to 34% of gross assets. Together the average interest cost is 2.76%. Over the medium term, the team expects total gearing to be between 20% and 30% of total assets. Many of the listed 'alternative income' funds continue to trade at significant premiums – and Greencoat is no exception on a current premium to NAV of 13%.